The function of tetrahydrobiopterin (BH4) in nitric oxide synthase (NOS) is unclear. For example, it is not known whether BH4 goes through an oxidation-reduction cycle that is coupled to oxygenation, or whether BH4 acts as an activator by reduction of the enzyme or by allosteric effects. In order to examine this problem, we investigated the reduction of quinonoid dihydrobiopterin (qBH2) to BH4, catalyzed by purified rat cerebellar NOS expressed in transformed human kidney 293 cells. NOS was found to catalyze the NADPH-specific reduction of qBH2 to BH4 at rates comparable to those of citrulline synthesis, and required addition of Ca++/calmodulin for optimal activity. Our combined studies provide the first demonstration for reduction of qBH2 to BH4, and indicate that this reduction proceeds at a low affinity flavoprotein ("diaphorase") site. This site is located on the reductase (C-terminal) domain, whereas the high affinity BH4 binding site required for NOS activity is located on the oxygenase (N-terminal) domain. We have extended our studies on the first partial reaction (oxygenation of arginine to N-hydroxyarginine) catalyzed by NOS. This reaction proceeds in the absence of added electron donor, in sharp contrast to the stringent requirement of the electron donor, NADPH, for the second partial reaction (oxygenation of N-hydroxyarginine to nitric oxide and citrulline). A question with important mechanistic implications is the nature of the endogenous reductant. Of the redox factors believed to be involved in NOS function, neither NADPH, flavins, nor heme appears to account for the endogenous reductant supporting N-hydroxyarginine synthesis. Photoreduction was also excluded as a source of electrons. Our studies do not exclude a possible role of BH4.